One company—Taiwan's Foxconn—makes a staggering 40 percent of the world's consumer electronic devices.

Starting now, Microsoft will be paid a toll on many of those devices. The company's long patent-licensing campaign has landed its biggest client yet in licensing Foxconn, formally named Hon Hai Precision Industry Co. Foxconn has agreed to take a license for any product it produces that runs Google's Android or Chrome operating systems.

The Redmond software giant has insisted for years now that any company making Android phones needs to license its patents. That campaign has generally been successful; so successful, in fact, that by 2011 Microsoft was making more money from patent licensing than from its own mobile phone system.

Now, Microsoft says that more than 50 percent of the Android phones in the world come from companies that have agreed to take licenses to its patents, including smartphone makers like LG, HTC, and Samsung. And that number is likely going to jump up today, as it announces that Foxconn, the Chinese company that makes 40 percent of the world's consumer electronic devices, has agreed to join its licensing program.

The details of the agreement remain undisclosed, although the press release makes sure everyone knows which way the money is flowing: Foxconn will be paying Microsoft, and not vice versa. The agreement will apply to all Android and Chrome OS devices made by Foxconn worldwide, including smartphones, tablets, and televisions.

Foxconn is an "original design manufacturer" or ODM, which is one of those behind-the-scenes companies that makes enormous numbers of devices, but never has its name printed on them. Microsoft is aggressively licensing its patents both at the OEM level (Samsung, HTC, Barnes & Noble, Acer, etc.) and the ODM level (licensing Foxconn as well as other companies you've never heard of, like Compal, Pegatron, and Wistron).

With the Foxconn deal in place, many Android devices will now be handled by two levels of companies, both of which have deals to license Microsoft patents. A source with knowledge of the deal explained that no device will be licensed more than once (which isn't allowed under patent laws, in any case). In situations where both the OEM and ODM has a deal with Microsoft, they'll work out between themselves who pays the license fee.

Foxconn is most famous for making iPhones and iPads, but the company has won significant contracts to make Android devices as well, including Amazon Kindles and Acer phones.

Going straight to the level of contract manufacturers could serve as a kind of end-run for Microsoft to get some licensing revenue even when the handset companies keep fighting. While Microsoft has struck deals with many Android makers, others, like Google-owned Motorola, continue to fight in court.

“We are pleased that the list of companies benefiting from Microsoft’s Android licensing program now includes the world’s largest contract manufacturer, Hon Hai,” said Horacio Gutierrez, the Microsoft VP who heads up the company's intellectual property group. “By licensing both brand name companies and their contract manufacturers, we have successfully increased the overall effectiveness and global reach of the program.”

“We recognize and respect the importance of international efforts that seek to protect intellectual property," said Samuel Fu, director of IP at Hon Hai. "The licensing agreement with Microsoft represents those efforts and our continued support of international trade agreements that facilitate implementation of effective patent protection.”

Correction: An earlier version of this article's headline referred to "China's Foxconn." While Foxconn has most of its factories in China, it is a Taiwanese company.

I have no ulterior motive and intend only to express awe when I say it is astonishing to me that a single company produces that percentage of the world's consumer electronics. What happens if for some reason they can't? Or won't? That's a lot of very expensive slack for anyone to try and pick up.

Wait, what? Can someone fill in the holes in Microsoft's plan for me, I don't see how this works. So let me get this straight.

1. Foxconn is a Chinese electronics company that makes phones to specification, but does not sell phones or make phone software. Also, they have nothing to do with Microsoft.2. Microsoft is a software company that does not make phones, and has nothing to do with android.3. ???4. Profit.

& if Google-owned Motorola should ultimately prevail, what then re the licensing deals MS has struck w/other Android makers?

Since these deals aren't being disclosed, it's not entirely clear, but the carrot Microsoft is offering is reportedly much more enticing than the stick is threatening. Microsoft wins because they get royalties and the outward appearance of victory in the concession of compliance by the manufacturers, while the manufacturers win because they get a whole host of patent protections beyond just the patents Microsoft claims are being violated in creating android devices.

Microsoft as patent troll? Who would've thought... I'm uncomfortable with the fact that a company can use patents to slap down companies in other industries. Microsoft doesn't make phones yet it threatens Android device manufacturers with patent infringement, althought it doesn't go after Google itself.

Would MS patents be related to the way Android handles certain things? If it's UI related or even an algorithm, it should be thrown out especially if prior art can be shown.

One, I'm a bit insulted that you think we don't know who Pegatron is. I recall when there was a good bit of news when they were spun off from ASUS.

Also, they are seriously going after Chrome OS? Ridiculous. Android is at least complex enough that there's a possibility of something that isn't completely bullshit involved, but Chrome OS is just a browser and a barebones userland on top of the linux kernel.

Oh Microsoft, how dare you protect the billions you invest in R&D? Microsoft is right to license its very broad patent portfolio.

Not hard to have a broad patent portfolio when you can spam the patent office. You'll get lots of patents, not all of which will survive actual scrutiny - but you can head that off by carrying a nice, big bat. Microsoft has managed to find the point at which companies would rather capitulate than push the matter.

Just like Oracle and Apple learned - not all patents are valid. The incompetence and overburdening of the USPTO puts all patents into question.

Oh Microsoft, how dare you protect the billions you invest in R&D? Microsoft is right to license its very broad patent portfolio.

Not hard to have a broad patent portfolio when you can spam the patent office. You'll get lots of patents, not all of which will survive actual scrutiny - but you can head that off by carrying a nice, big bat. Microsoft has managed to find the point at which companies would rather capitulate than push the matter.

Just like Oracle and Apple learned - not all patents are valid. The incompetence and overburdening of the USPTO puts all patents into question.

I agree that many patents out there are questionable, but I think if you look behind the picture and correlate R&D expenditure, it does validate the size of Microsoft's portfolio. Unlike some other sham companies.

So this is a very sneaky way for Microsoft to make money on those patents without having to fight for them: Samsung and other phone manufacturers won't have to pay MS anymore and Foxconn is probably happy to have MS not cause a stir. Also, they're probably getting money for MORE devices now: almost all gadgets that might run afoul of MS but wouldn't be worth pursuing (such as cheap media players that don't even run Android but are able to run FAT-formatted SD cards for example), or devices that MS was hardly even aware of (like those that might only come out in small numbers in China, or things like iPhone clones, or gadgets that don't even fall under US law now because they go to other countries, now generate a direct stream of money to MS.

In addition, because there will possibly be fewer lawsuits and Samsung and others won't be bothered by MS anymore, it will create a lot of goodwill from those companies, which will encourage the broken patent system to persist.

Nothing new. MS is doing the exact thing they feared would happen to itself. As Timothy Lee wrote years ago:

"Microsoft sang a very different tune in 1991. In a memo to his senior executives, Bill Gates wrote, “If people had understood how patents would be granted when most of today’s ideas were invented, and had taken out patents, the industry would be at a complete standstill today.” Mr. Gates worried that “some large company will patent some obvious thing” and use the patent to “take as much of our profits as they want.”"

Wait. So Foxconn which produce exclusively hardware have to pay royalties - not based on their hardware infringing but based on supposed infringing by the software other companies will run on those chips?

If I bought two runs of chips from them - identical chips - one for an android device and one for some other software I'd pay more for the ones running android due to these licenses. How on earth does that make sense for identical chips?

If they're making so much money from patent extortion (ahem, licensing), would it be fair yet to call Microsoft a patent troll?

I think a "patent troll" is generally regarded as a company that doesn't and has no intention to use the IP they own. Whatever you may think of Microsoft's licensing agreements, I don't think the term "patent troll" really applies.

Oh microsoft....if you can't make profit on your own products, might as well off of someone else's. What other organisms/organizations do that? Oh yeah, a leech.

Oh Microsoft, how dare you protect the billions you invest in R&D? Microsoft is right to license its very broad patent portfolio.

Complete BS. You should be able to copy write code, but the idea that you can get a patent on software is ridiculous. People should not be constrained from a form of expression, or from the self reliance of writing their own code. Microsoft's patent lawyers and senior managers are going to burn in a special hell, one they reserve for patent trolls and people who talk at the theater.